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More About This Title Corporate Fraud Handbook, Fourth Edition: Prevention and Detection
English
Put the brakes on fraud.
It is much more cost-effective to prevent fraud than to punish it. Providing an insider's look into the most prevalent fraud schemes used by employees, owners, managers, and executives, Corporate Fraud Handbook, Fourth Edition provides you with a systematic approach to stop fraud in its tracks before it happens.
Sharing his four decades of experience in the field of fraud detection and deterrence, author Dr. Joseph T. Wells—founder and chairman of the Association of Certified Fraud Examiners—brings each scheme to life by using real case studies submitted to the ACFE by the fraud examiners who investigated them.
Written for anyone responsible for reducing fraud losses and mitigating the risk of fraud, Corporate Fraud Handbook features:
Tips and techniques for quantifying financial losses from fraud schemesObservations and conclusions in each chapter to help you devise prevention and detection strategiesReal-life case studies that provide a view inside the mind of a fraudsterThe fraud tree, a systematic classification of the various types of occupational fraudStatistics from the ACFE's 2012 Report to the Nations on Occupational Fraud and AbuseFrom sophisticated investment swindles to petty theft, false overtime to bribery, discover how to prevent and detect corporate fraud with the expert guidance found in Corporate Fraud Handbook, Fourth Edition.
English
Dr. JOSEPH T. WELLS, CFE, CPA, spent nearly a decade as a U.S. FBI Special Agent, is the founder and Chairman of the Association of Certified Fraud Examiners (ACFE) and the author of twenty-two books. For his landmark research in fraud detection and deterrence, Dr. Wells has been inducted into the American Institute of Certified Public Accountants' Business and Industry Hall of Fame and, for nine years in a row, was named to Accounting Today's list of the 100 most influential people. He holds a doctorate in commercial science from York College, The City University of New York.
English
Prefaceix
About the ACFExiii
1.INTRODUCTION1
Defining “Occupational Fraud and Abuse” 2
Research in Occupational Fraud and Abuse 6
2012 Report to the Nations on Occupational Fraud and Abuse 25
Notes 42
PART 1 ASSET MISAPPROPRIATIONS45
2. INTRODUCTION TO ASSET MISAPPROPRIATIONS47
Overview 48
Definition of “Assets” 48
How Asset Misappropriations Affect Books of Account 49
Notes 58
3. SKIMMING59
Overview 63
Skimming Data from ACFE 2011 Global Fraud Survey 64
Unrecorded Sales 68
Understated Sales and Receivables 73
Theft of Checks through the Mail 74
Short-term Skimming 79
Converting Stolen Checks 80
Concealing the Fraud 83
Detection 89
Prevention 90
Notes 91
4. CASH LARCENY93
Overview 96
Cash Larceny Data from ACFE 2011 Global Fraud Survey 97
Incoming Cash 101
Cash Larceny from the Deposit 106
Miscellaneous Larceny Schemes 110
Detection 111
Prevention 113
5. CHECK TAMPERING115
Overview 118
Check Tampering Data from ACFE 2011 Global Fraud Survey 119
Forged Maker Schemes 123
Intercepted Checks 129
Forged Endorsement Schemes 129
Altered Payee Schemes 133
Concealed Check Schemes 137
Authorized Maker Schemes 137
Concealment 141
Detection 149
Prevention 151
Electronic Payment Tampering 153
Prevention and Detection 153
Notes 155
6. REGISTER DISBURSEMENT SCHEMES157
Overview 157
Register Disbursement Data from ACFE 2011 Global Fraud Survey 161
False Refunds 165
False Voids 171
Concealing Register Disbursements 171
Detection 174
Prevention 174
7. BILLING SCHEMES177
Overview 181
Billing Scheme Data from ACFE 2011 Global Fraud Survey 182
Cash-Generating Schemes 186
Invoicing via Shell Companies 186
Invoicing via Nonaccomplice Vendors 191
Personal Purchases with Company Funds 196
Detection 202
Prevention 203
8. PAYROLL AND EXPENSE REIMBURSEMENT SCHEMES205
Overview 208
Payroll Scheme Data from ACFE 2011 Global Fraud Survey 209
Payroll Schemes 212
Expense Reimbursement Data from ACFE 2011 Global Fraud Survey 226
Expense Reimbursement Schemes 230
Detection of Payroll Schemes 237
Detection of Expense Reimbursement Schemes 238
Prevention of Payroll Schemes 239
Prevention of Expense Reimbursement Schemes 241
9. INVENTORY AND OTHER ASSETS243
Overview: NonCash Misappropriation Data from
ACFE 2011 Global Fraud Survey 246
Misuse of Inventory and Other Assets 249
Theft of Inventory and Other Assets 252
Concealment 264
Detection 266
Prevention 269
Misappropriation of Intangible Assets 271
Note 272
PART II CORRUPTION273
10. BRIBERY275
Overview 278
Corruption Data from ACFE 2011 Global Fraud Survey 282
Bribery Schemes 286
Something of Value 300
Economic Extortion 301
Illegal Gratuities 301
Detection 301
Prevention 303
Notes 305
11. CONFLICTS OF INTEREST307
Overview 311
Purchasing Schemes 312
Sales Schemes 315
Other Schemes 316
Detection 318
Prevention 319
Note 319
PART III FRAUDULENT STATEMENTS321
12. ACCOUNTING PRINCIPLES AND FRAUD323
Introduction 323
Fraud in Financial Statements 327
Major Generally Accepted Accounting Principles 330
Responsibility for Financial Statements 334
Users of Financial Statements 335
Types of Financial Statements 335
Sarbanes-Oxley Act 336
Financial Statement Fraud Data from ACFE 2009 Global Fraud Survey 347
Notes 352
13. FINANCIAL STATEMENT FRAUD SCHEMES353
Overview
Defining Financial Statement Fraud
Costs of Financial Statement Fraud
Methods of Financial Statement Fraud 359
Fictitious Revenues 359
Timing Differences 362
Concealed Liabilities and Expenses 368
Improper Disclosures 371
Improper Asset Valuation 374
Detection of Fraudulent Financial Statement Schemes 379
Deterrence of Financial Statement Fraud 395
14. OCCUPATIONAL FRAUD AND ABUSE: THE BIG PICTURE401
Defining “Abusive Conduct” 401
Measuring the Level of Occupational Fraud and Abuse 402
Understanding Fraud Deterrence 405
Corporate Sentencing Guidelines 409
Ethical Connection 411
Concluding Thoughts 413
Notes 414
APPENDIX: SAMPLE CODE OF BUSINESS ETHICS AND CONDUCT415
Introduction 415
Conflicts of Interest 417
Company Assets 421
Political Contributions 423
Employee Conduct 423
Compliance Letter and Conflict of Interest Questionnaire 425
Bibliography427
Index435
